A Three-step Solution for Supplier Diversity

Improve relations with all your suppliers, including small and diverse vendors

Use "one source" of supplier data to gain a more accurate picture of the supply base

Improve relations with all your suppliers, including small and diverse vendors

By Barry Hochfelder

Minority-owned firms generate $1 trillion in economic output to the U.S. economy, creating almost six million jobs, according to the Minority Business Development Agency (MBDA) of the U.S. Department of Commerce.

The agency says that the growth of minority-owned firms outpaced that of non-minority-owned companies from 2002-2007 (the latest statistics available) by a wide margin. The domination was in gross receipts (56 percent from 21 percent); employees (27 percent from 0.03 percent); and number of firms (46 percent from 9 percent).

All this makes diversity in the workplace vital, not only from a social standpoint, but a bottom-line perspective. At Duke Realty, diversity among its suppliers and vendors is woven into its culture.

The Indianapolis-based real estate company has installed a Supplier Diversity Program to reach out to qualified minority, women-owned, disadvantaged and small businesses. The company considers this a win-win opportunity "to expand our base of high-quality goods and service providers, while enhancing economic opportunities for these groups," Chairman and CEO Denny Oklak writes on the Duke Realty Web site.

With more than 139 million square feet of industrial, office and medical office properties in 18 major cities across America — as well as construction capabilities — Duke Realty's diversity initiative is formidable. To make it work, the company began using the Supplier Central Diversity Edition from CVM Solutions (Oakbrook Terrace, IL) about three years ago.

"They wanted to improve relationships with all of their suppliers, including small and diverse businesses," says Jon Bovit, chief marketing officer of CVM. "With the downturn in the economy, organizations increasingly want to improve supplier relationships across the board. In addition, a lot of companies are trying to put their arms around small and diverse businesses because those were the most hurt by the economy."

CVM, Bovit sees that trend unabated as we move toward the second quarter of 2011.

For Duke Realty, diversity is stressed throughout the company and its nearly 1,000 employees. "Everything we do is based on our core values," adds Ronalda Minnis, manager for supplier diversity at Duke Realty. "There are four pillars: business development, community outreach, supplier diversity, and recruiting and retention."

Three-step Solution

CVM's Cloud-based (via Force.com) software-as-a-service (SaaS) solution has three steps that allow customers to "connect the dots on suppliers": clean and enrich; collect and manage; and measure and mitigate.

Clean and enrich: CVM reviews the company's vendor files, removes duplicates and appends data to indicate which are diverse and which are in the small-business class. The customer can look at the information and see what they're spending where.

Collect and manage: Suppliers can go in and fill out basic information, including diversity statistics. The customer can review these when seeking new vendors.

Measure and mitigate: This supplies even more analysis and measures vendor performance. It mitigates potential supplier issues by proactively alerting the customer to changes in information. This is accomplished by monitoring compliance and risk programs and tracking standard metrics, and automating corrective action plans and risk mitigation.

CVM's clients often start with just the first step because it's cost-effective and low risk. Then they add the other elements. "Like a lot of our customers, Duke Realty started out in one area and branched out with our other capabilities," Bovit explains.

Duke Realty recently launched a strategic initiative based on CVM Supplier Central to manage its 5,400 suppliers by enabling a supplier registration self-service, facilitating the identification and prequalification of suppliers, and automating its ongoing supplier information maintenance process. CVM Supplier Locator helps Duke Realty identify potential new vendors. This element is in the measure and mitigate portion of the product.

"Using CVM Supplier Locator, we identify suppliers we don't have in our system with a needed trade'," says Duke Realty's Minnis. "They have 11 million diversified suppliers across the country. Depending on the community, we can find [one we need] because the platform is connected to every major certified organization in the country.

"This is an evolving process," she adds. "We want to get all our associates involved with using the system, understanding its features and how it works. There was no difficulty getting associates up to speed on the benefits of the system. Once people realize those benefits, it becomes second nature. Some use it more than others, but it's being used. The payback for us is on the projects we have been awarded."

One-source Managing

Effectively managing suppliers is, of course, a key element of business. By moving to a single source, a more accurate picture of supplier activity is gained, duplicate and out-of-date records are eliminated, and supplier relationships are easier to discern.

Getting back to diversity, companies need a proactive program to identify minority and women-owned suppliers that supports their diversity goals. Other major supplier management benefits include the identification of savings or new revenue opportunities through the improvement in working capital by leveraging linkages in the existing supply base to manage same suppliers' payment terms, and increased community involvement and competitiveness from minority- and women-owned businesses.

"This system is allowing us to get to know diverse suppliers in the communities we serve," Minnis says. "Depending on the community, we can find out because the platform is connected to every major certified organization in the country."

She says it's necessary for companies who want to ensure a diverse work force to know exactly what they're looking for. "If they're looking to get a feel for the existing supply chain and who's diverse or not diverse, there is a tool for that," Minnis says. "If they're looking to manage suppliers and new vendors inclusively, there's a tool for that, and if they're looking for a way to identify potential vendors, there's a tool for that. You can identify who they currently do business with and manage new suppliers."